"What the dealers have started doing is looking outside, to the O'Reilly's and CarQuests," says consultant Ed Kovalchick, CEO and founder of Net Profit Inc., Alabaster, Ala. "They offer parts that come off the same line. It's the same part for less money, and that's appealing to customers with higher mileage cars."
Interested in more technology news? Sign up for our new Aftermarket IT newsletter by clicking here!
Epicor Software hopes to make that process easier for dealerships. The company recently announced the Epicor Aftermarket Parts Portal, which serves as a link between dealerships and the 20,000 aftermarket distributors that use Epicor's Internet AutoParts (IAP) sourcing system.
The portal was expected to go live for distributors in January. It will help distributors take advantage of the expanding sales channel emerging with dealerships that have opted for an all-makes/models approach and are looking for aftermarket parts for off-brand customers, as well as for post-warranty and used vehicle work.
Right now the solution integrates directly with the ADP dealer management system (Epicor has also been in talks with Reynolds and Reynolds). "We can launch our product in an integrated fashion with ADP, pull the open repair orders, link them electronically to query the aftermarket network of suppliers, source the parts and let them purchase them," says Scott Thompson, vice president for automotive e-commerce at Epicor.
Dealer interest grows for aftermarket parts
Thompson says the development of the new portal originated from conversations with several of its clients. "We were surprised to hear that distributors were telling us some of their biggest customers were car dealerships," Thompson says. "We went out to take a look at what car dealers were doing, and what struck us was that they had a huge challenge in terms of operationally managing what we call a buy out."
According to Thompson, in order to buy out a part (purchase a part outside of their OE supply network) for a non-branded repair, the fixed-operations department had to manually manage a significant amount of paperwork both to order the part and properly bill for it. This process resulted in hours wasted matching paperwork with parts and repair orders.
While dealerships have direct integration for electronic ordering of OEM parts for their brands, ordering aftermarket parts often involves extra steps in researching, locating and billing the parts. The portal is designed to streamline those processes by providing a link to the IAP community directly from the dealer management system. "We saw an opportunity to build a system that integrates all of that activity," Thompson says. "That way they don't lose those transactions."
Thompson says demand is growing for these types of dealer/aftermarket partnerships. "The nameplates are encouraging them to do more out-of-brand car repairs," Thompson says. "They are saying, 'We want you to be the family repair center of choice. If you can build a good relationship with a family of car drivers, we're more likely to get their next purchase business.'"
For trade-ins, there is another value to being able to easily access aftermarket parts. "A few years ago, if a non-brand trade rolled in the front door, the tires had barely stopped turning before it was rolled out to a wholesaler," Thompson says. "Now dealers are keeping the newer and more interesting cars on the lot for resale, and they usually need some reconditioning before they can sell them."
Fixed-ops departments widen their net
In order to keep attracting new business, some dealerships are switching to menu-based pricing for parts, offering two or three tiers of parts (OE and aftermarket). That presents an opportunity for aftermarket suppliers to open new channels with dealerships that in the past would have only made one-off orders on an irregular basis.
"Customers today want options; they love options," Kovalchick says. "In some cases the factory part may be more expensive, or you have to buy an assembly to get one component. In the aftermarket, you can buy [that one component]."
A number of aftermarket franchise operations have also targeted dealerships (particularly used car dealerships), and brands like NAPA and Meineke have started turning up at these locations.
Stocking multiple lines can be challenging for cash-strapped fixed-ops departments, however, so a more efficient electronic ordering process could benefit locations where carrying multiple inventory lines isn't possible.
"We were surprised on the front end at how enthusiastic dealerships were about the opportunity to access more aftermarket parts," Thompson says. "It's still a politically charged concept. The dealers are being careful to say that they aren't trying to replace the relationship with the branded parts-supplying network. But I was surprised at how many aftermarket parts some of these dealers buy."
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
